I'm in an industry that is seeing intense pressures from Medicare cuts and need to reduce back office expense. I know there are savings to be had by closing our business offices for the week of Christmas but need to figure out how to value the opportunity. Savings would come from an increase in PTO usage, reduction of PTO cash outs, and productivity savings due to the fact that this week is typically very unproductive. Has anyone faced this decision recently and how did you value the opportunity? We are on a PTO system, and wouldn't want to have to increase PTO to accommodate this move, and would also like to know of any unforeseen consequences from such a change. Thanks!
How to value savings from closing offices between Christmas and New Years?
Answers
Not sure how much you will save if individuals use their PTO time, as you still will be paying them. But there are many examples of firms closing during set times. In NYC, 47th Street jewelers have a time when a majority take a week. In August, the auto industry grinds to a halt to re-tool factories for the new model year.
Alternatively, depending on your industry, if you are slow that week...it is a great time to work on issues such as Policies and Procedures, testing of Business Continuity Plans, and Compliance. While the pace of work will not be quick, down time has a value in completing these tasks vs. fitting them in during your high production periods.
Well, if they use their PTO for this time off, they will simply re-accrue that PTO over time up to whatever max the company sets and then you're right back at square one, right? I would suggest you consider moving the max PTO accrual (a.k.a. "the extra severance when I quit fund") down at the same time if you actually want to have a long term impact from the holiday week shutdown.
And, having reduced max PTO accruals before, the trick is plenty of communication and notice. A few years back a company I was at did this at Dec 31st, and we gave plenty of notice to everyone. We paid out the folks who were at the max in order to move them down to the new, lower max amount, and we strongly encouraged folks to take time off to make that move on their own for the good of the company. Your holiday "furlough" may serve that purpose just fine.
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My thought was that closing would force PTO usage in exchange for mostly unproductive work hours and also reducing the number of hours cashed out at the end of the year.
I have to think that has a value to it.
Here's a thought. Give that week off as part of the benefits. Readjust your salaries accordingly and everyone wins, most of all the company.
Don't call it PTO or any other name, think
Anonymous - Unfortunately forcing PTO is a terrible idea. My wife works for one of the world's largest contractors, the office she works in shuts down completely. Employees that haven't been there long enough to accrue enough PTO are left unpaid. The employees that have been there long enough are forced to use PTO on a vacation they might not want to take. Sure the employees get a week off without pay. However, I am a proponent of I will take my vacation when I want to, given my employer approves of my time off. I don't want to be forced into taking time off at the benefit of the company.
PTO is for personal time off. Personal time off is not forced. Wayne has the best thought about this idea.
Our offices shut down the week between Christmas and the New Year. It's a great benefit. I agree with Wayne and Chris on this one, though I am curious how on a company would approach adjusting salaries.
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For companies (IMHO who are myopic), instead of paying X for the role of employee, they pay X-1 week; plus that Xmas week off.
The employee isn't informed of this adjustment, because they were offered a job at a certain pay.
As for current employees, one can always play with raises and bonuses.
I personally would never do this; but sometimes I'm a lone wolf....
My organizaiton does the Christmas to NYears shutdown, no adjustments to PTO, salary, or anything. The value comes from the people-side, letting them get away and focus on family and friends. They really enjoy the time away. Upon their return, they are focused (after the story telling), and much more productive than otherwise.
You won't see any financial statement impact, necessarily. The benefits will manifest indirectly via the personnel side.
That being said, let me suggest something way crazy. Give them the two days before Christmas. Those 2 days are packed with pressure to get non-work tasks completed. When we gave EE's the week in between the holidays, we saw most of the staff take the two or three days off before Christmas, using their own PTO.
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Human Capital